Failure to Record Amortization Expense on a Patent During the Current

question 130

Multiple Choice

Failure to record amortization expense on a patent during the current year will result in which of the following?

• A)Net income will be overstated, but there would be no effect on total assets.
• B)Net income for the year and total assets would both be overstated.
• C)Assets will be overstated, but there would be no effect on net income for the year.
• D)Net income and assets will both be understateD.Failure to record patent amortization results in an understatement of expenses and therefore an overstatement of net income.Assets are overstated because the patent account was not reduced by the amortization that was not recorded.

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Definitions:

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A lawsuit based on an act or omission that leads to harm or injury to another and amounts to a civil wrong for which courts impose liability.

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